By Ozan Ergenay and Andrey Sychev
(Reuters) โ Volkswagen shares were down 3% in early trade on Monday with analysts citing uncertainty about the automakerโs cost-cutting deal with unions and likely headwinds in 2025.
Fridayโs agreement, hailed by unions as a โChristmas miracleโ, calls for more than 35,000 future job cuts and a reduction of production by almost a quarter, but without immediate plant closures or layoffs.
It fell short of managementโs initial ambitions and market expectations, and lacked a sense of urgency, according to Jefferies analyst Philippe Houchois.
Given the pace of change at rival firms and the competitive environment in the sector, โthere is a risk that the gains will come too late and will not be sufficient,โ ODDO BHF analysts wrote in a note to clients.
VWโs earnings momentum is also unlikely to improve significantly next year given weak demand in China and potential tariffs after Donald Trumpโs election, they added.
Analysts at both Jefferies and ODDO BHF said more details were needed to understand how VWโs management intends to achieve its announced cost cuts of 15 billion euros ($15.61 billion) a year.
The dealโs impact on costs will become visible only after 2025, and this is just the beginning of a 5-year process, J.P. Morgan analysts wrote in a note, though they called it โa positive step in the right directionโ.
Volkswagen shares were down 2.39% at 86.68 euros in Frankfurt as of 1051 GMT.
Shares in German peers BMW, Mercedes-Benz, VWโs major shareholder Porsche Automobil Holding and Porsche AG were down between 0.9% and 1.7%.
Volkswagen shares are down more than 20% this year and are trading around their 2010 levels.
($1 = 0.9610 euros)
(Reporting by Ozan Ergenay and Andrey Sychev in Gdansk; editing by Jason Neely)
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